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Demand forecasting
is the activity of
estimating the
quantity of a product
or service that
consumers will
purchase. It involves
techniques, guesses, and quantitative
methods.
2
Demand forecasting
Demand forecasting is predicting or
anticipating the future demand for a
product.
Length of forecasts
THE FORECAST
financial planning
Methods of Demand
Forecasting
Qualitativ
e Method
Statistical
Method
Opinion
Polling
Method
Expert
Opinion
Method
Sales
Force
opinion
survey
method
Consumer
s Survey
Methods
Trend
Projectio
n
Barometri
c
Technique
s
Regressio
n Method
Complete
Enumerati
on Survey
method
Sample
Survey
method
End Use
Survey
Method
Economet
ric
Technique
s
Simultane
ous
equation
method
Delphi method
Advantages
1.
Facilitates the maintenance of anonymity of the respondents
identity throughout the course.
2.
Saves time and other resources in approaching a large number
of experts for their views.
Limitations/presumptions:
1.
Panelists must be rich in their expertise, possess wide knowledge
and experience of the subject and have an aptitude and earnest
disposition towards the participants.
2.
Presupposes that its conductors are objective in their job,
possess ample abilities to conceptualize the problems for
discussion, generate considerable thinking, stimulate dialogue
among panelists and make inferential analysis of the
multitudinal views of the participants.
Advantages:
1. Simple no statistical techniques.
2. Based on first hand knowledge.
3. Quite useful in forecasting sales of new products.
Disadvantages:
1. Almost completely subjective.
2. Usefulness restricted to short-term forecasting.
3. Salesmen may be unaware of broader economic
change
Complete Enumeration
Survey
Door-to-door survey for forecast
period.
Limitation is that it requires lots of
resources, manpower and time.
Sample Survey
Some representative
households are selected
on random basis as
sample and their opinion
is taken.
This sample truly
represents the
population.
This method is less
costly.
Statistical Method
Trend Projection
Past data is used to make future
predictions .
Graphical Method
A
Illustration:
n=5
y = 300
x = 15
x2 = 55
xy = 950
n=5
y = 300
xy = 950
x = 15
x2 = 55
Econometric Models
Econometrics
refers to the
application of mathematical
economic theory and statistical
procedures to economic data in order
to verify economic theorems and to
establish quantitative results.
1.Regression Method
REGRESSION MODEL
It is a statistical technique for
quantifying the relationship between
variables. In simple regression analysis,
there is one dependent variable (e.g.
sales) to be forecast and one independent
variable. The values of the independent
variable are typically those assumed to
"cause" or determine the values of the
dependent variable.
REGRESSION EQUATION
Y=
Where
Y= value being forecasted
xx
= constant value
= coefficients of regression
= independent variable
x1y1 = a x1 + b x12(2)
Substituting the various values, we get,
2.Barometric Techniques
It is a instrument
measuring changes.
the future can be
predicted from certain
happenings in present
Commonly Used indicators:(1) Gross National Income.
(2) Employment
(3) Agriculture Income
(4) Bank Deposits etc.
(5) Industrial Production
(6) Construction contracts awarded for building materials.
(7) Personal Income.
3.Simultaneous Equation
Method
a set of two or more equations, each
containing two or more variables
whose values can simultaneously
satisfy both or all the equations in the
set, the number of variables being
equal to or less than the number of
equations in the set.
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